Luxury-home flipping is heating up in affluent neighborhoods as well-heeled builders and investors seek better returns than they get on other investments.

Morgan Brown at the century-old Hancock Park home that she purchased as… (Arkasha Stevenson, Los…)

Fed up with severe water damage to her home and embroiled in litigation with contractors and real estate agents, superstar singer Rihanna put her Beverly Crest mansion up for sale last year for $4.5 million.

That was roughly half what she paid for it. A local buyer pounced. He repaired the structure, gave the pool a face-lift and re-landscaped the property. A few months ago the 8,500-square-foot contemporary-style home was back on the market with a new price tag: $9.95 million.

Home flipping is back — and it's going upscale.

The rapid-fire buying, fixing and reselling of houses played out on a mass scale during the bubble years, when prices were soaring. Back then, flippers could reap fat profits by adding little more than a fresh coat of paint. The practice all but vanished in the mortgage meltdown as values plummeted.

Now with prices on the rise in many areas and top-quality homes in short supply, home flippers are flooding back into the market. Nearly 100,000 homes flipped nationwide in the first half of the year, up 25% from the same period last year, according to real estate information firm RealtyTrac, which defines a flip as a house resold within six months of purchase.

Multimillion-dollar home flipping, which isn't tracked separately, can take much longer to complete — up to two years in some instances. But luxury home flipping is heating up in affluent neighborhoods, according to real estate experts. They said there's pent-up demand from well-heeled move-up buyers looking for turn-key homes.

"They are stepping off the sidelines because the housing market is doing better and interest rates are still very low," said Paul Habibi, who teaches real estate at the UCLA Anderson School of Management.

Flips in the $1-million-and-up price range may involve foreclosures, or outdated or damaged homes. Some simply need sprucing up.

Flippers include local builders as well as investors seeking better returns than they can get from bonds and savings accounts that are paying next to nothing. Habibi said flippers are more confident than they were a year ago that they can resell quickly without ending up with a house languishing for sale.

"There's a sentiment now that you don't really want to miss the boat," Habibi said, "that the days of price decreases are behind us."

Even some real estate agents are getting in on the action, Rodeo Realty agent Josh Flagg said. "Everybody who has cash is doing flips."

Flippers are being helped by a dearth of homes for sale.

A normal market has enough homes up for sale to last six or seven months. In October, California's total inventory of unsold homes fell to 3.1 months from 5.5 months a year earlier, according to the California Assn. of Realtors. For houses priced at $1 million and up, the supply of unsold homes stood at 5.8 months, down from 10.7 months a year earlier.

Hollywood connections have brought some top-dollar turnarounds to light.

A traditional-style house in Bel-Air where Judy Garland lived growing up sold last year for $5.2 million. With fresh paint and some minor upgrades, the two-story home resold 14 months later for $6.77 million.

Actor Dennis Quaid parted with his Pacific Palisades estate in late 2011 for $9.5 million. The 2.5-acre equestrian property, with its newly renovated country French main house, went for $11.2 million in September.

Luxury house flipping is particularly active in the Bird Streets area of the Hollywood Hills, a coveted neighborhood popular with celebrities and tech titans for whom money is no object.

Parts of Beverly Hills, West Hollywood and Venice also are seeing their share of tricked-out remodels returning to the market.

A beachfront house in Malibu that sold in May for about $5.6 million returned to the market in November at $12.5 million. A mansion in gated Beverly Park that sold in May for $17.2 million is now being offered at $26.5 million.

Multimillion-dollar home flippers have the potential to make hefty profits.

"It's not uncommon to see returns north of 20% in the luxury flipping market," said Max Nelson, a founding partner at Deasy/Penner & Partners. The real estate broker estimates about a quarter of his transactions this year involve flipped properties. Last year, it was about 10%.

Rehabilitating historic houses can be a particularly lengthy process because aged homes can hold lots of surprises, meaning more expense — and risk.

Flipper Morgan Brown found that out recently when she took on a Hancock Park house that was more than a century old. It took nine months of cosmetic work, systems upgrades and floor plan reconfiguration before the home was ready to return to the marketplace.

It is the third and largest project locally for Brown, who comes from a family of builders and has real estate interests in other states. Brown bought the time-worn Tudor in December for $2.75 million. She estimated she has put close to $1 million into the 6,080-square-foot house, now listed for almost $4.5 million.